Soft loans offered to households having just escaped from poverty

Updated: 16:51’ - 28/07/2015

Households having just escaped from poverty will now be entitled to soft loans from the Vietnam Bank for Social Policies (VBSP) to develop production and business activities, according to a decision recently issued by the Prime Minister.

This is really a good news for households having just escaped from poverty who, under previous regulations, were ineligible for preferential credit from the VBSP.

Under the decision, a household having just escaped from poverty means a household which used to be a poor or near-poor household but managed to earn an average per-capita income higher than the law-prescribed near-poor threshold and has been removed from the list of poor households and households living just above the poverty line for at most three years

Loan amounts and terms will be agreed between households and the VBSP. However, the loan amount provided to a household must not exceed the maximum amount offered to poor households for the same production or business purpose. The loan term will be decided based on the production or business cycle and the client’s debt repayment capacity but must not exceed five years.

The interest rate applicable to households having just escaped from poverty will equal 125 percent of that applicable to poor households in the same period. Meanwhile, the overdue debt interest rate will equal 130 percent of the lending interest rate.

Other matters such as extension or conversion of debts into overdue ones will comply with Government Decree No. 78 of 2002 on credit for the poor and other social policy beneficiaries.

According to the VBSP’s statistics, of roughly 700,000 households having just escaped from poverty nationwide, 500,000 have not yet repaid loans taken under credit programs for poor and near-poor households. Hence, the new policy, in the immediate future, will benefit around 200,000 households which, at the time being, have never borrowed capital from, or have repaid all their debts to, the VBSP.-